Play The Long Savings Game With Bonds

Today’s post is a guest post from

You have several different options when it comes to setting aside some money to save. While you can place your money in a traditional savings account or in a retirement plan, you may be interested in looking for ways to invest the money to get interest.If you don’t mind waiting, bonds are a great way to get a return (or interest) on your original amount.You purchase a bond for a certain amount of money. On a future date, when your investment has matured, you can redeem the bond. You are then given the original investment back as well as the interest that was gained.

On a positive note, there is little risk in this investment and it is a secure system. On the negative side, bond maturation can vary and usually it takes a while.

Typically, bonds have a better return on interest. If you stick the same amount of money in a savings account, you aren’t going to come close to making the amount of interest that a bond would generate.

If you have the cash and you don’t need access to it any time soon, this can be a sound venture. You can stagger your investments if you are worried about cash flow.

If you aren’t sure that you want to have all of your money put away and inaccessible at the same amount of time, purchase bonds every once in a while. They will all reach maturation at different times and all of your money won’t be out of reach.

You aren’t going to invest in bonds today and be a millionaire at the end of the year. In fact, this type of investment probably isn’t ever going to turn you into a millionaire.

However, it is an uncomplicated way for you to put money aside and earn interest. Some bonds are set at a fixed interest rate. Because of this, you will have some idea of what you are going to get back for this bond.

There are also instances where the interest rate can be flexible and will change based on economic conditions and other variables.

Before taking on this type of investment, it is important to find out as much as possible about the specifics.

Typically, short term investments come with a lot of risk. If you see yourself with some real long term goals, bonds are a viable option. The risk is low and you are in it for the long haul.

Because of the length of time it takes for a bond to mature, many people choose to give them as a gift to children, or even grandchildren. The younger generation has the opportunity to enjoy the benefits of bond ownership.

Before you rush out and start looking for bonds to invest in, check out the web to get the latest rates and to find out more about how you can obtain this type of investment.

You can purchase directly from institutions such as the federal government and even the bank, but the more information you have about the investment, the better decision you will be able to make.

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Sometimes All It Takes Is One

We’re in the midst of another great baseball season.  What makes it great? Well, because it’s baseball season!  Here’s a lesson that you can take from baseball and apply to your personal finances.

One of the things you’ll often see in a long season is a team going through a slump.  Losses pile up.  Hitters stop hitting.  Pitchers don’t make it very far.  Nothing can seem to go right.

At some point, the slump ends often with dramatic fanfare.  You’ll sometimes see a team that had gone 1-9 in it’s last ten rattle off four or five wins in a row.

If you look at the rationale behind that, you can many times trace it back to one guy.

One guy will break out of a slump.  Last month, our Detroit Tigers (or ‘Pussycats’ as my grandfather used to call them when they weren’t playing very well) were having a horrid run of it.  They were getting two or three hits a game, pitchers weren’t sharp, and the losses were piling up.  Then, Victor Martinez, a top-shelf hitter, came off the disabled list.  He started hitting….and hitting…and hitting some more.

Soon, others in the lineup starting hitting.  The hits started flowing.  The pitchers started pitching better, and of course, the wins started flowing in again.  All was good, and the success could be traced back to one guy.

You can apply that same lesson to personal finances.  Often, everything about your finances seems to be stuck in a slump.  Your investment returns might be suffering.  Your cash outflows are too high, and unexpected expenses keep mounting.  In a nutshell, nothing seems to be going right.

Often, you’ll find that success in one area serves as a catalyst for overall personal financial achievement.  It works for baseball, and it can work with your finances too.

So, if things aren’t going great, don’t try to correct everything.  Try focusing on one thing.  Work to bring in more income.  Work to get one debt paid off.  Work to bolster that retirement account.

Chances are if you are able to get one win, more wins will start to come your way.

Just like in baseball!

Go Tigers!

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How Do You Switch From Saving To Spending?

Sometimes a commercial catches my eye as one that really delivers on the message it’s trying to get across.

One group that I’ve seen lately is the Fidelity ‘green line’ commercials, where there is a ‘green line’ guiding someone down the path to their financial goals, and of course that green line is the input and help that Fidelity offers.  They seem to be focusing on the ‘end of the green line’ leading towards retirement.

I don’t know why but the commercials work for me.  I don’t use Fidelity for anything and have no immediate plans to use the type of services that they’re offering, but I can see how they would be appealing to those who would.

It made me think.  I wonder if they offer, not only the best way to save and get to the goal of retirement (though I won’t be able to retire by 40 *sigh* but one can dream), but how to make the transition once you get there.

Since I’ve started working, I’ve been focused on saving.  The goal is to build wealth, save money, and work so that you can accomplish big things along the way but also eventually have a retirement.

That seems like it would be a very big switch.  You have been tooling along for decades trying to save and save, and now suddenly your goal is no longer to save, but to spend.

You actually expect your net worth and savings/investment accounts to start going down in value.

That alone seems like a very scary prospect to change that mindset, but it’s all part of a personal finance plan that should be in place if you’re ready to retire.

I wonder, do these firms offer any guidance on the psychological, as well as the financial, aspects that go along with retirement?  If you’re retired, how did you make this switch?  If you’ve got retirement on the horizon, how do you prepare for this?

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When Investing, Do You Invest In What You Use?

There are hundreds of thousands of investment opportunities out there.  From stocks to mutual funds to ETFs to CDs to bonds and many, many other financial instruments, the opportunities are endless.

If you’re making individual investment decisions, one of the things to keep in mind when making investment decisions is the simple question: Do you invest in what you use?

mb-201101appleConsider the following:

  • If you use and love your iPad, iTouch, iPhone, and iPod, do you own any Apple stock?
  • If you use Amazon for most of your online shopping needs, talk about it to all your friends, and blog about it all the time, do you own any of it’s stock?
  • If you’ve been a faithful Netflix customer since 2003, do you have any of their stock?
  • If you just bought a Ford car in the last year or two because you love the cars and believe it’s a solid company, do you own any Ford stock?

Chances are, with just the few companies and products I listed above, you could have made a lot of money had you invested when you fell in love with the company whose products you use everyday.  Apple stock has gone nuts since the introduction of all the products above.  Amazon was one of the first Internet bellwether stocks.  Netflix has gone through the roof over time.  Ford stock has increased many times over since hitting rock bottom over two years ago.  Opening an investment account is easy and the fees to have made these transactions would have been minimal compared to the returns.

I’m not advising that anyone change their investment strategy to running out and buying stock in every single company whose products you buy, but if you truly fall in love with a company, it might at least be worth taking a look, because there’s a chance that many others are about to or have fallen in love with that company to. That can translate into increased sales, increased profitability, and of course, a higher stock price.

It’s an idea to at least put in the back of your mind next time you have an opportunity for investing.

(Disclaimer: I am not a financial adviser nor does this post construe any recommendations on individual stock or strategy, it is for the purpose of entertainment and discussion only).

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